Casual employment: All employers need to know about recent changes and possible claims
A must-read explainer for employers that explains the definitions, recent developments and key issues associated with casual employees.
Casual employees are often hired by employers to supplement their workforce where they may require work to be performed on an intermittent and ad-hoc basis. The renewed focus on casual employment in 2018 serves to remind employers about the need to actively manage casual employment arrangements.
In this post, we step employers through the true nature of casual employment, recent developments and remind employers about key issues associated with casual employees.
What is casual employment?
Casual employment is not a new category of employment, however, defining casual employment has been an ongoing task for courts and tribunals in Australia for decades.
There are a range of factors that are relevant to assessing whether a casual employment relationship is truly casual and, in each case, these factors can weigh differently. Thankfully, there are a few key attributes of casual employment that have crystallised over the years, including:
- The ad-hoc, short term nature of casual employment;
- The payment of a casual loading; and
- The absence of a firm commitment to future work.
Where a casual employment relationship is not truly casual, employment is often described as ‘regular’ and‘systematic’ casual employment.
When a casual employee is a regular and systematic casual employee, they may be able to access certain entitlements not typically available to true casual employees.
Case law can assist in distinguishing between a true casual employee and a regular and systematic employee.
For example, in Bayley v Temples, a truck driver, who was employed on a casual basis to relieve other truck drivers was found to be employed on a regular and systematic basis notwithstanding that his hours varied from week to week and he took a break of three weeks from working for the employer.
In determining that the truck driver was a regular and systematic casual employee, the Fair Work Commission (FWC) found that the weekly nature of the work, the extent to which it generally started at the same time, involved similar functions and occurred for similar reasons were all factors that spoke to the regular and systematic nature of the employee’s casual employment.
A similar conclusion was reached in Kneen-McDaid v Jaycorp Pty Ltd, where a telemarketer was found to be a regular and systematic casual employee. In that case, the telemarketer worked various hours, ranging from between about 20 hours per week to 70 hours per week, including various start and finish times on various days of the week. The FWC held that, despite the variation in hours and times of work, the employee had worked consistently during the period of her employment and was, therefore, a regular and systematic casual employee.
There are also a number of decisions confirming that breaks between periods of casual employment do not necessarily disrupt the regular and systematic nature of the casual employment, even when the worker is a seasonal worker (Grey v Ardmona Foods).
In essence, a casual employee will not be a true casual employee if they work regularly and consistently over an extended period, notwithstanding that their hours may vary.
Recent developments in casual employment
Casual loading offsets — WorkPac v Skene
The principles of what casual employment is was further examined in the Full Court of the Federal Court of Australia decision of WorkPac Pty Ltd v Skene (Skene).
In summary, the employee was employed by WorkPac (a labour-hire business) to carry out duties as a dump-truck driver at a number of mining sites. He was employed pursuant to a contract of employment that identified him as a casual employee. He worked on a rotating roster that was set twelve months in advance and consisted of twelve-hour days, with seven days on and seven days off. He was paid a flat rate of $50 (eventually increased to $55) for his work.
Upon termination of his employment, the employee claimed he was not a casual employee but was, in fact, a permanent employee and therefore entitled to payment for accrued but untaken annual leave.
In determining whether or not the employee was a casual employee, the Full Court undertook an extensive analysis of the relevant case law. It confirmed the long-held view that true casual employment is irregular, uncertain, unpredictable and intermittent with a discontinuity in the pattern of work, including the absence of a firm advanced commitment to work.
On the evidence before it, the Full Court determined that the employee was a permanent employee and therefore entitled to payment of accrued but untaken annual leave upon termination of his employment.
One of the key issues to come out of Skene was the ability of employers to offset payments made for casual loading to employees who are later found to be permanent employees.
Understandably, the concern amongst employers has been that, absent any ability to claim an offset for casual loading payments made, employees could effectively ‘double-dip’ by keeping the casual loading and then having entitlements provided in addition.
In Skene, the ability of the employer to claim an offset failed on the basis that there was no clear indication that the employee was paid a casual loading at all — the rate was referred to as an hourly rate not specifying a casual loading component.
Fair Work Amendment (Casual Loading Offset) Regulations 2018
In response to this concern, the federal government passed the Fair Work Amendment (Casual Loading Offset) Regulations 2018, to clarify the position in relation to employers who wished to claim an offset in these circumstances.
The position is therefore that, where an identifiable loading is paid in lieu of any entitlement under the National Employment Standards under the Fair Work Act 2009, an employer is entitled to seek to offset that loading if it turns out that the employee did have such an entitlement.
This applies to all employment relationships irrespective of whether or not they existed at the time these amendments were made.
Modern awards — casual conversion
In October 2018, most modern awards were amended to include a model clause dealing with the right of casual employees to request conversion to permanent employment.
In short, the model clause states that a “regular casual employee” has the right to request that their employment be converted to permanent full-time or part-time employment. A “regular casual employee” is defined as a casual employee who, for the last 12 months, has worked a pattern of hours on an ongoing basis which, without significant adjustment, the employee could continue to perform as a permanent employee.
The model clause requires that requests for casual conversion be made to an employer in writing and that an employer consult with the employee who has made the request. Requests may be refused after consultation where there are reasonable grounds for the refusal.
Modern awards — minimum engagement
Also, in October 2018, many modern awards were amended to clarify minimum engagement periods for casual (and part-time) employees.
For those awards that did not already stipulate this, a model clause was inserted which states that the minimum engagement period for casual (and part-time) employees is now two hours.
Possible claims
Casual employment is a popular choice for employers who want flexibility, however, with casual employment comprising approximately of 25% of the Australian workforce, it is also timely to remind employers about possible claims that casual employees can make against employers.
Some employers may have a misapprehension that casual employees are not able to make any claims either during their employment or upon termination. However, like full-time and part-time employees, casual employees are entitled to make claims relating to their employment.
The Fair Work Act provides protections for casual employees against unfair dismissal and adverse action.
To access the unfair dismissal jurisdiction, the Fair Work Act stipulates that an employee (casual or otherwise) must have:
- Completed the minimum employment period of six months (or one year for a small-business employer); and
- Be covered by a modern award or enterprise agreement and earn less than the high-income threshold.
For casual employees, service as a casual employee will not count towards the minimum employment period unless the casual employee was:
- Employed on a regular and systematic basis; and
- Had a reasonable expectation of continuing employment with the employer on a regular and systematic basis.
As discussed above, the absence of these two factors have been used to describe what is casual employment. The converse is also true, as demonstrated in Cetin v Ripon Pty, where the Australian Industrial Relations Commission Full Bench held: “The informality, uncertainty and irregularity of an engagement supports a conclusion that the employment has the characteristic of being casual. Conversely regular and systematic engagements with a reasonable expectation of continuing employment are usually not characteristic of casual employment.”
In Smith v Goldfields People Hire, the employer raised a number of jurisdictional objections to the employee’s unfair dismissal application, including relevantly that the employee was a casual employee and had no reasonable expectation of continuing employment.
The employee was employed as a casual driver for the labour-hire employer. During his employment, he was engaged to drive trucks for a third party. The employee worked:
- Regular shifts on a four-day-on, four-day-off roster working between 4.30am to 6pm from November 2016 to April 2017; and
- Shifts over a three-week roster cycle between April 2017 and September 2017 with varying start and finishing times.
The employer argued that the employee was a casual employee and had no reasonable expectation of his employment continuing on a regular and systematic basis. The employer pointed to the labour-hire employment conditions that the employee signed at the commencement of employment acknowledging that he was employed on assignment basis and that there was no expectation of permanent employment.
The employee argued that, other than during periods of training or authorised leave, he worked a regular roster system with a clear pattern of rostered hours and days.
The FWC noted that an expectation of permanent employment differed from an expectation of continuing employment and that working on an assignment basis for a third party did not preclude him from having an expectation that his employment with the employer would continue.
The FWC dismissed the employer’s jurisdictional objection. It held that the employee was employed on a regular and systematic basis and that the employee had an expectation that his employment would continue on a regular and systematic basis.
Evidently, provided that a casual employee has completed the minimum employment period, that casual employee will be entitled to press their claim for unfair dismissal.
General protection provisions
Unlike the unfair dismissal jurisdiction, all employees, including casual employees are covered by the general protections provisions. There are no threshold requirements to access this jurisdiction and employees do not have to meet any requirements to make a claim (such as period of service).
Generally, the general protections provisions provide that a “person” must not take adverse action against another “person”, including because of a workplace right, the person’s sex, age or race or other protected attribute or because the person is temporarily absent from work due to illness or injury. A person can include an employee, prospective employee, an independent contractor and a prospective independent contractor.
For example, in Kennewell v MG & CG Atkins trading as Cardinia Waste & Recyclers (Kennewell decision), a casual truck driver claimed that he was dismissed from his employment after he made inquiries to his employer about his status of employment and complaints that he was not being paid minimum entitlements under the Waste Management Award 2010. The employer denied this and submitted the employee was dismissed on the basis of his performance, including that he took too long to perform his duties. The employer also had a history of complaints being made to the Fair Work Ombudsman in relation to the underpayment of entitlements.
The Federal Court of Australia found that employer contravened the general protections of the Fair Work Act when it dismissed the casual employee from his employment because the employee made complaints regarding the payment of his full entitlements. The employer was ordered to pay $2,900.85 to the employee and a penalty of $7,500 for the contravention.
As the Kennewell decision also demonstrates, casual employees can also make underpayment claims to the Fair Work Ombudsman (FWO). Like all other employees, employers must ensure that casual employees are paid their minimum entitlements, including casual loading and overtime rates, and are paid for the minimum hours of work.
Casual employees are also not precluded from making other claims in relation to their employment, including bullying claims, workers compensation claims or discrimination claims. For example, the anti-bullying jurisdiction under the Fair Work Act applies to “workers”, using the same broad definition as the Work Health and Safety Act 2011 to include any individual who carries out work in any capacity. Similarly, State and Federal anti-discrimination legislation prohibit employers from discriminating against employees or prospective employees on the basis of a protected attribute.
What employers need to know
With the renewed focus on the nature of casual employment, it is timely for employers to examine the casual employment arrangements that they may have in place.
Employers should firstly conduct an audit of their casual workforce and assess whether these employees are appropriately classified as casuals. If they are regular and systematic casuals, employers should assess whether it is more appropriate for them to be employed as part-time or full-time employees.
A review of casual employment contracts should be undertaken to ensure that casual engagements are appropriately described, including, for example, that employment will be on an ad hoc basis and separately identifying the casual loading to be paid to compensate for paid leave entitlements.
Employers should also familiarise themselves with the new and changing entitlements under modern awards, including, for example, the new two-hour minimum engagement period for casual employees which has been inserted into awards that did not previously have minimum daily engagement periods, and any penalty rates changes and their interaction with casual loading.
Employers should also be prepared for dealing with casual conversion requests, including the obligation to notify casual employees of their right to request conversion and responding to requests by casual employees for conversion to full-time or part-time employment.
